NEW YORK (TheStreet) -- Bank of America (BAC) - Get Report investors who criticized the board's override of their vote splitting the roles of chairman and CEO will get a chance to reverse the decision in a special meeting, according to a regulatory filing on Friday.
The board's recommendation: Please don't.
While a date for the meeting has yet to be scheduled, the Charlotte, N.C.-based bank said it will let shareholders ratify or reject an October change to corporate bylaws that allowed CEO Brian Moynihan to assume the role of chairman. The change undid a binding shareholder vote from 2009 to separate the two roles, which were then held by Kenneth Lewis. Lewis had become an object of investor ire after his acquisition of Countrywide Financial and Merrill Lynch in the buildup to the financial crisis forced the bank to accept a government bailout of $45 billion.
Shareholders were none too pleased with the fact the board negated their decision without holding a vote. After criticism from two proxy-advisory firms, the bank announced just days before its annual shareholders' meeting in May that shareholders would be allowed to vote on the change no later than its 2016 meeting.
"We were getting fairly consistent feedback that shareholders were upset with the process" although they seemed fine with CEO Brian Moynihan serving as chairman, Lawrence Di Rita, a Bank of America spokesman told TheStreet at the time.
In Friday's filing, the board says the October decision of then-chairman Charles Holliday Jr. to resign provided an opportunity to review the bank's leadership structure. Directors believed the best setup would allow the board the flexibility of combining the roles of chairman and CEO in some situations and appointing an independent chairman in others; they noted that the breakup vote had been passed with only a 50.3% majority and said it reflected opinions unique to the time, when the makeup of both management and the board was vastly different.
The bank also conducted research on the best leadership structure for large companies and found that only 28% of S&P 500 companies had separate people filling the roles of chairman and CEO and just 3% made such a structure mandatory. Of the other five largest US-based banks, only Citigroup has separated the two top roles; they're combined at Goldman Sachs
(GS) - Get Report, JPMorgan Chase
(JPM) - Get Report, Morgan Stanley
(MS) - Get Report, and Wells Fargo
(WFC) - Get Report.
Bank of America said it found "no conclusive empirical correlation between an independent chair and superior corporate governance or performance," and with Holliday leaving, directors believed the best candidate for chairman was already serving as CEO.
"Mr. Moynihan's unparalleled depth of understanding of the company and its businesses allows him to clearly articulate the company's position and speak fluently with a unified voice in its dealings with clients, regulators and other constituencies in an increasingly complex business and regulatory environment," the board said.
The filing says that the vote must be held before the next annual meeting because the board's leadership structure is critical to its work. The proxy is subject to review by the SEC, after which a date will be set. "The Board believes it is important to seek stockholders' ratification of the bylaw amendment as soon as possible," directors said in the filing.
Shareholders of record as of Aug. 10, 2015, will be eligible to vote. Should they strip Moynihan of the chairman role, the bank has vowed to "promptly implement" a plan to find a new independent chairman.
If that happens, it would occur against a backdrop of several leadership changes the bank announced last week, including CFO Bruce Thompson's decision to step down. Thompson, who held the role for about four years, is the longest-serving finance chief since Moynihan took over.